India could face higher liquefied natural gas (LNG) costs this winter as prolonged disruption around the Strait of Hormuz squeezes supplies from Qatar and intensifies competition among Asian and European buyers. With already at about twice last year’s levels, Indian importers could find themselves competing for alternative cargoes from the US and other suppliers as Europe prepares for another potentially challenging heating season.
The pressure comes as Qatar, one of the world’s biggest LNG exporters, remains unable to restore shipments to normal levels. Yukio Kani, chairman and global chief executive officer of Japan’s Jera Co., the world’s largest LNG buyer, said the market should not expect Qatari supplies to return soon.
“We don’t expect Qatar coming back to the market soon,” Yukio Kani, chairman and global chief executive officer of Japan’s Jera Co., said on Bloomberg TV on Friday. LNG spot prices are double this time last year, and “market participants worry about this coming winter,” he said.
Qatar LNG disruption puts Asia and Europe in a supply race
LNG flows through the Strait of Hormuz from Qatar and the United Arab Emirates rose in September to their highest level since the Iran war began, according to Kpler. But shipments remained 80% below February levels, highlighting the extent of the disruption.
Qatar has also extended force majeure on LNG shipments to long-term customers in .
For India, the disruption matters because the country relies on imported LNG for sectors including fertilisers, city gas, industry and power generation. A sustained reduction in Middle Eastern supplies could push buyers towards more expensive spot cargoes.
LNG shipments through Hormuz rebound in September
LNG traffic through the Strait of Hormuz increased in September despite continuing security concerns. S&P Global Energy data showed 19 cargoes crossed the key waterway during the month, including 13 from Qatar and six from the United Arab Emirates, up from 15 in June.
Kpler recorded an even higher tally of 21 cargoes in September. S&P analyst Eric Yep said LNG transits accelerated in the second half of the month and could recover to 25% of pre-war levels if the trend continues into October.
Qatar LNG vessels resume voyages to India
More QatarEnergy-linked LNG vessels have been seen transiting the strait in recent weeks. Three vessels, including Al Kharaitiyat, Al Gharrafa and Milaha Qatar, reappeared west of India after disappearing from tracking data while inside the waterway.
Al Kharaitiyat and Al Gharrafa were last tracked inside the strait in late September before reappearing off India’s western coast. Milaha Qatar, managed by Germany’s Pronav Ship Management, also reappeared west of India and is now offloading its cargo at Hazira port.
Europe’s gas demand could increase pressure on India
Europe is emerging as a key source of uncertainty for Asian LNG buyers. Gas storage levels remain seasonally low, while the European Union is set to ban Russian LNG imports from January.
Kani said the combination could push prices higher.
“If Europe has a “severe winter, they have no choice but to buy LNG to provide heating energy for people,” he said. “So Europe may be in a very difficult situation.”
A colder winter would force supplies, potentially drawing cargoes away from Asia or increasing the price Indian buyers must pay to secure them.
US LNG becomes more important for India
With Qatari supplies constrained, the US and other LNG exporters are likely to become increasingly important to global buyers. But replacing Middle Eastern cargoes is not simply a matter of finding additional production. Shipping availability, voyage distances and competition between buyers can all raise delivered costs.
The squeeze has already been reflected in prices. prices reached their highest level since late 2022 last month after the loss of Qatari supply tightened the market.
For India, the key question this winter will be how quickly global LNG flows normalise. If disruptions persist while European demand rises, Indian buyers could face a more expensive market for securing the gas needed to meet domestic demand.
(With Bloomberg and Reuters inputs)